Bitcoin has finally broken below the $60,000 support level for the first time in two months. The largest digital asset in the world was largely contained in a euphoria phase since the beginning of the year, especially after the launch of Spot Bitcoin ETFs in the US market. However, the current consolidation of Bitcoin’s price indicates that The euphoria might fade.
According to a new report from Glassnode, an on-chain analytics company, the euphoria surrounding Bitcoin that has been active for the past 6.5 months appears to be fading. At the same time, BTC distribution has entered the fear zone and investors are now heavily weighted toward selling.
Selling pressure is increasing
After reaching an all-time high of over $73,737 in March 2024, Bitcoin has fallen more than 18% as investors take profits. This price drop was accompanied by an increase in the percentage of addresses with losses, indicating increased selling pressure. The percentage of addresses that make a profit is fallen together from over 99% to 86% at the time of writing.
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On-chain analytics platform Glassnode noted this in its recent report report the consolidation action. According to the Net Unrealized Profit & Loss (NUPL) metric, Bitcoin was in a euphoria mode very early in this cycle compared to previous cycles. Notably, the NUPL crossed the 0.5 mark about 6.5 months before the just-completed halving, amid the hype over Spot Bitcoin ETFs.
This is in comparison to the 2021 market cycle, when NUPL entered a profit zone 8.5 months after Bitcoin’s halving. This metric suggests that the market is still in the euphoria phase over the past seven months, but has cooled down significantly due to correction in the past two months.
Interestingly, the report found a “marked increase in net outflows” across all portfolio sizes in April, indicating current sentiment among traders. This means traders are now under pressure on the sell side across the board. Furthermore, a majority of short-term bondholders (one week to one month) have been posting losses at the 90-day +1sd level since March.
Source: Glassnode
What does this mean for Bitcoin?
While the ‘fear’ rating may worry investors, a pullback after such a steep price rise is considered healthy by most crypto analysts. Many long-term holders are still there stay strong and wait for the halving effect. At the time of writing, Bitcoin is trading at $59,899 and is down 5.35% in the last 24 hours.
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Considering that the current cost basis for short-term holders (STH) is $66,700, and their realized price is $59,800, many more holders in this cohort may have fallen into the loss zone.
According to crypto analyst Ali Martinez, $59,800 is a sum of $59,800 main price level to watch, as history has shown, Bitcoin has a tendency to bounce over the price realized by STH.
BTC price falls to $57,000 | Source: BTCUSD on Tradingview.com
Featured image of CryptoSlate, chart from Tradingview.com
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